“Apple probably paid Qualcomm between $5 billion and $6 billion to settle the litigation between the two companies, UBS analyst Timothy Arcuri estimated in a note distributed on Thursday,” Kif Leswing reports for CNBC.
“Apple probably also agreed to pay between $8 and $9 in patent royalties per iPhone, estimated UBS, based on Qualcomm’s guidance that it expects earnings per share to increase by $2 as a result of the settlement,” Leswing reports. “The UBS estimate suggests that Apple paid a high price to end a bitter legal battle that spanned multiple continents and threatened Apple’s ability to release a 5G iPhone and put pressure on Qualcomm’s licensing business model that contributes over half of the company’s profit.”
“Since the settlement, Qualcomm stock is up over 38%,” Leswing reports. “Apple shares are 2% higher.”
‘Arcuri wrote that the one-time payment was likely for royalty payments that Apple had stopped paying when the two companies were embroiled in litigation, and that is how it was calculated,” Leswing reports. “If Apple does pay between $8 and $9 in royalties per iPhone it would be a significant increase over the $7.50 in royalties that it previously paid Qualcomm per phone, according to Apple COO Jeff Williams’ testimony in an FTC trial.”
Read more in the full article here.
MacDailyNews Take: Because analysts’ estimates regarding anything and everything to do with Apple have historically proven to be oh-so-accurate.
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